MR 1248 Explained: Zakat Treatment for Off-Plan Real Estate Projects in Saudi Arabia

Saudi Arabia’s Ministerial Resolution No. 1248 (June 2025) revises Article 73 of the Zakat Executive Regulations, offering long-awaited guidance for real estate developers. The amendment defines how under-construction and off-plan projects should be treated when computing Zakat liabilities, effective from fiscal year 2025 onward.

Key Changes:

• Clear formula introduced: Zakatpayers can compute deductions as:
  Deduction = Project balance at year-end – Additions made during the year (only if positive).
• Separate project evaluation: Each project must be evaluated on its own. For mixed developments, deductions are applied to non-current assets first.
• Back-year eligibility: Developers can request the rule’s application to earlier years if they meet ZATCA’s documentation and timing criteria.

• Deduction limits: The deduction cannot exceed the project’s opening balance — ensuring consistency and preventing over-deduction.

Conclusion

MR 1248 gives developers a defined Zakat formula for off-plan projects — effective 2025, with optional retroactive application under ZATCA’s approval.

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